OMB No.

1545-1414
Form 8846 Credit for Employer Social Security and Medicare Taxes
Paid on Certain Employee Tips 2003
Department of the Treasury Attachment
Internal Revenue Service 䊳 Attach to your tax return. Sequence No. 98
Name(s) shown on return Identifying number

Note: Claim this credit only for social secur ity and Medicare taxes paid by a food or beverage establishment where tipping is
customary for providing food or beverages. See the instructions for line 1.
Part I Current Year Credit
1 Tips received by employees for services on which you paid or incurred employer social security
and Medicare taxes during the tax year (see instructions) 1
2 Tips not subject to the credit provisions (see instructions) 2
3 Creditable tips. Subtract line 2 from line 1 3
4 Multiply line 3 by 7.65% (.0765). If you had any tipped employees whose wages (including tips)
exceeded $87,000, see instructions and check here 䊳 4
5 Form 8846 credits from If you are a— Then enter the Form 8846 credits from—
pass-through entities:
其
a Shareholder Schedule K-1 (Form 1120S) lines 12d, 12e, or 13
5
b Partner Schedule K-1 (Form 1065) lines 12c, 12d, or 13

6 Current year credit. Add lines 4 and 5 6

Part II Allowable Credit (See Who must file Form 3800 to find out if you complete Part II or file Form 3800.)

其
7 Regular tax before credits:
● Individuals. Enter the amount from Form 1040, line 41
● Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,
Part I, line 1; or the applicable line of your return 7
● Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a
and 1b, or the amount from the applicable line of your return
8 Alternative minimum tax:

其
● Individuals. Enter the amount from Form 6251, line 35
● Corporations. Enter the amount from Form 4626, line 14 8
● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56
9 Add lines 7 and 8 9
10a Foreign tax credit 10a
b Credit for child and dependent care expenses (Form 2441, line 11) 10b
c Credit for the elderly or the disabled (Schedule R (Form 1040), line 24) 10c
d Education credits (Form 8863, line 18) 10d
e Credit for qualified retirement savings contributions (Form 8880, line 14) 10e
f Child tax credit (Form 1040, line 49) 10f
g Mortgage interest credit (Form 8396, line 11) 10g
h Adoption credit (Form 8839, line 18) 10h
i District of Columbia first-time homebuyer credit (Form 8859, line 11) 10i
j Possessions tax credit (Form 5735, line 17 or 27) 10j
k Credit for fuel from a nonconventional source 10k
l Qualified electric vehicle credit (Form 8834, line 20) 10l
m Add lines 10a through 10l 10m
11 Net income tax. Subtract line 10m from line 9. If zero, skip lines 12 through 15 and enter -0- on line 16 11
12 Net regular tax. Subtract line 10m from line 7. If zero or less, enter -0- 12
13 Enter 25% (.25) of the excess, if any, of line 12 over $25,000 (see instructions) 13

其
14 Tentative minimum tax (see instructions):
● Individuals. Enter the amount from Form 6251, line 33
● Corporations. Enter the amount from Form 4626, line 12 14
● Estates and trusts. Enter the amount from Form 1041,
Schedule I, line 54
15 Enter the greater of line 13 or line 14 15
16 Subtract line 15 from line 11. If zero or less, enter -0- 16
17 Credit allowed for the current year. Enter the smaller of line 6 or line 16 (if line 16 is smaller, see
instructions). Also include this amount on Form 1040, line 52; Form 1120, Schedule J, line 6d; Form
1120-A, Part I, line 2a; Form 1041, Schedule G, line 2c; or the applicable line of your return 17
For Paperwork Reduction Act Notice, see back of form. Cat. No. 16148Z Form 8846 (2003)
Form 8846 (2003)
General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.
Purpose of Form
Certain food and beverage establishments
(see Who Should File below) use Form
8846 to claim a credit for social security
and Medicare taxes paid or incurred by the
employer on certain employees’ tips. The
credit is part of the general business credit.
You can claim or elect not to claim the
credit any time within 3 years from the due
date of your return on either your original
return or on an amended return.
Who Should File
File Form 8846 if you meet both of the
following conditions.
1. You had employees who received tips
from customers for providing, delivering, or
serving food or beverages for consumption
if tipping of employees for delivering or
serving food or beverages is customary.
2. During the tax year, you paid or
incurred employer social security and
Medicare taxes on those tips.
How the Credit Is Figured
Generally, the credit equals the amount of
employer social security and Medicare
taxes paid or incurred by the employer on
tips received by the employee. However,
the employer social security and Medicare
taxes on tips that are used to meet the
Federal minimum wage rate applicable to
the employee under the Fair Labor
Standards Act are not included in the
computation. The Federal minimum wage
rate is $5.15 per hour.
For example, an employee worked 100
hours and received $350 in tips for
October 2003. The worker received $375 in
wages (excluding tips) at the rate of $3.75
an hour. Because the Federal minimum
wage rate was $5.15 an hour, the
employee would have received wages,
excluding tips, of $515 had the employee
been paid at the Federal minimum wage
rate. Thus, only $210 of the employee’s
tips for October 2003 is taken into account
for credit purposes.
Specific Instructions
Figure the current year credit from your
trade or business on lines 1 through 4.
Skip lines 1 through 4 if you are only
claiming a credit that was allocated to you
from an S corporation or a partnership.
S Corporations and Partnerships
S corporations and partnerships figure their
current year credit on lines 1 through 4,
enter any credit from other flow-through
entities on line 5, and allocate the credit on
line 6 to the shareholders or partners.
Attach Form 8846 to Form 1120S or 1065
and show on Schedule K-1 each
shareholder’s or partner’s credit. Electing
large partnerships include this credit in
“general credits.”
Line 1
Enter the tips received by employees for
services on which you paid or incurred
employer social security and Medicare
taxes during the tax year. Include tips
received from customers for providing,
delivering, or serving food or beverages for
consumption if tipping of employees for
delivering or serving food or beverages is
customary.
Line 2
If you pay each tipped employee wages
(excluding tips) equal to or more than the
Federal minimum wage rate, enter zero on
line 2.
Figure the amount of tips included on
line 1 that are not creditable for each
employee on a monthly basis. This is the
total amount that would be payable to the
employee at the Federal minimum wage
rate reduced by the wages (excluding tips)
actually paid to the employee during the
month. Enter on line 2 the total amounts
figured for all employees.
Line 4
If any tipped employee’s wages and tips
exceeded the 2003 social security tax
wage base of $87,000 subject to the 6.2%
rate, check the box on line 4 and attach a
separate computation showing the amount
of tips subject to only the Medicare tax
rate of 1.45%. Subtract these tips from the
line 3 tips, and multiply the difference by
.0765. Then, multiply the tips subject only
to the Medicare tax by .0145. Enter the
sum of these amounts on line 4.
Reduce the income tax deduction for
employer social security and Medicare
taxes by the amount on line 4.
Part II—Allowable Credit
The credit allowed for the current year may
be limited based on your tax liability. Use
Part II to figure the allowable credit unless
you must file Form 3800, General Business
Credit.
Who must file Form 3800. You must file
Form 3800 if you have:
● A credit for employer social security and
Medicare taxes paid on certain employee
tips from a passive activity,
● More than one credit included in the
general business credit (other than a credit
from Form 8844 or 8884), or
● A carryback or carryforward of any of
those credits.
See the instructions for Form 3800 for a
list of credits included in the general
business credit.
Page 2
Line 13
See section 38(c)(4) for special rules that
apply to married couples filing separate
returns, controlled groups, regulated
investment companies, real estate
investment trusts, and estates and trusts.
Line 14
Although you may not owe alternative
minimum tax (AMT), you generally must
still compute the tentative minimum tax
(TMT) to figure your credit. For a small
corporation exempt from the AMT under
section 55(e), enter zero. Otherwise,
complete and attach the applicable AMT
form or schedule and enter the TMT on
line 14.
Line 17
If you cannot use all of the credit because
of the tax liability limit (line 16 is smaller
than line 6), carry the unused credit back 1
year then forward up to 20 years. See the
instructions for Form 3800 for details.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated average time
is:
Recordkeeping 8 hr., 7 min.
Learning about
the law or the form 18 min.
Preparing and sending
the form to the IRS 26 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. See
instructions for the tax return with which
this form is filed.